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Earnings roundup: Washington Mutual earnings fall 20 percent

Wed., April 18, 2007

Washington Mutual Inc. said Tuesday its first-quarter profits slid 20 percent amid a nationwide implosion of the subprime home loan market.

The Seattle-based company, the nation’s largest savings and loan, said its net income was $784 million, or 86 cents a share, for the three months ended March 31, down from $985 million, or 98 cents per share, in the same period a year ago.

Revenue in the January-March period, including net interest income and noninterest income, was $3.62, up from $3.59 billion in the same period last year.

Analysts polled by Thomson Financial were looking for earnings of 83 cents on $3.6 billion in revenue.

Kerry Killinger, Washington Mutual’s chairman and chief executive, said the company’s retail banking, card services and commercial groups fared well, while the home loan market — particularly the subprime segment — remained a serious challenge.

Wells Fargo & Co., the nation’s fifth largest bank, reported Tuesday that first-quarter net income rose 11 percent, narrowly exceeding Wall Street expectations thanks to strong growth in commercial loans and core deposits divisions.

Still, like other banks, Wells Fargo saw some signs of worsening consumer credit and reported that net charge-offs and nonperforming assets rose in the January-March period from a year earlier. Rising interest rates have been making it more difficult for some borrowers to pay back loans, including mortgages.

San Francisco-based Wells Fargo posted profit of $2.24 billion, or 66 cents per share, in the first quarter, up from $2.02 billion, or 60 cents per share, a year earlier. Wells Fargo has reported double-digit earnings per share growth in 17 of the past 20 quarters.

The Coca-Cola Co., the world’s largest beverage maker, said Tuesday its first-quarter profit jumped 14 percent on a double-digit rise in sales, despite continuing problems in its North America unit.

The results, announced before the market opened, beat Wall Street expectations.

The Atlanta-based company said it earned $1.26 billion, or 54 cents a share, for the three months ending March 30, compared to a profit of $1.11 billion, or 47 cents a share, for the same period a year ago.

Excluding one-time items, Coca-Cola said it earned $1.29 billion, or 56 cents a share, in the quarter. On that basis, analysts surveyed by Thomson Financial were expecting earnings of 53 cents a share.

Revenue in the January-March period rose 17 percent to $6.10 billion.

First-quarter earnings at International Business Machines Corp. rose 8 percent and matched Wall Street expectations Tuesday, as a boost from software acquisitions helped overcome only moderate growth overall.

In the first three months of this year, traditionally IBM’s slowest quarter, the Armonk, N.Y.-based company earned $1.84 billion, $1.21 per share. In the comparable period last year IBM showed profits of $1.71 billion, or $1.08 per share.

Analysts surveyed by Thomson Financial were expecting $1.21 a share for the first quarter.

IBM’s revenue rose 7 percent to $22.0 billion, slightly ahead of the analyst forecast of $21.9 billion.

“Benefiting from its rapid shift to a new chip-making process and a big tax windfall, Intel Corp.’s first-quarter profit surged 19 percent as lower production costs helped the company withstand another round in a fierce price battle with rival Advanced Micro Devices Inc.

Intel also raised its full-year profit margin guidance and said it would spend slightly more on research and development in 2007 than the company had previously forecast.

“Health care products maker Johnson & Johnson said Tuesday its first-quarter profit fell 22 percent as a big charge for a recent acquisition offset record sales driven by last year’s purchase of a stable of top consumer health products.

Still, J&J roundly beat analysts’ expectations, sending its shares up $1.53, or 2.4 percent, to close at $64.55, with trading double their normal volume on the New York Stock Exchange.


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